The Iraqi Governing Council and the U.S.-led coalition are trying to reach a compromise on Kurdish autonomy before the country goes under Iraqi control scheduled for late June. The Kurdish region in the north has run its own affairs under international protection since the 1990 Gulf War, and the Kurds want to continue doing so. But neighboring countries and other Iraqi ethnic groups are concerned that too much autonomy could threaten Iraq's fragile unity and destabilize the region.

The coalition and the Governing Council reached a deal in November paving the way for a transition to a sovereign Iraqi government on the last day of June. But before Iraq can regain its sovereignty, the council and the Coalition Provisional Authority, or CPA, need to work out the details of the transition, including how the new government will be structured.

The current holder of the Governing Council's rotating presidency is Adnan Pachachi of the Iraqi Independent Democrats party. He is a respected elder statesman, who served as Iraq's foreign minister in the country's last democratic government that was overthrown by the Ba'ath party in 1968.

Mr. Pachachi is confident that the Governing Council will work out the details of the transition soon.

"We want to finish the fundamental law, or the law for the administration of the Iraqi state, hopefully before the end of this month," said Mr. Pachachi. "This is very important, so that we can start on the process for choosing the members of the legislative assembly. And the sooner we do this the better because with the formation of a provisional government, then we will be entitled to get our sovereignty back and also the authority that the CPA is now exercising."

But in order to agree on the transitional government, the council has to decide what to do about the Kurds.

Kurdish leaders in the north have been pushing hard for a federal system that will preserve the autonomy they have had from the government in Baghdad since the end of the first Gulf War. By most accounts, the Kurds' proposal for a federal state also includes putting more territory under Kurdish control than some of the country's other ethnic groups would like.

That idea worries not only some Iraqis, but also the leaders of neighboring Turkey, Syria and Iran, all of which have their own restive Kurdish populations. They fear that too much Kurdish autonomy in Iraq would encourage Kurdish separatist movements elsewhere. They also worry about the potential disintegration of Iraq, which would create major turmoil in the region.

Several members of the Governing Council have proposed a federal system that differs significantly from the Kurdish plan.

The Turkman representative on the council, Songul Chapook, supports federalism, which she believes will give ethnic minorities, including Kurds and Turkmans, a bigger voice in the central government. But she cautions the Kurds against striving for too much independence.

"I think our Kurdish brothers, if they think they can be independent and they can be able to say a government alone, they would be a weak government," she said. "Why they not with all of this Iraq, big Iraq? It's better for them. Then no one can touch them."

Iraqi and coalition officials believe it is fairly clear that there will be some kind of federal system in Iraq. Coalition spokesman Dan Senor says the questions now are what it will look like in the transitional period beginning in late June, and whether it will change when an elected government takes over, which is scheduled for sometime next year.

"Federalism is one of the principles that is to be enshrined in this interim administrative law," he said. "How that manifests itself is to be worked out between the coalition and the governing council, and those are details that they are working through."

Aides to the Governing Council president for January, Mr. Pachachi, have told several western news organizations that there is simply not enough time to reach a final settlement on Kurdish autonomy before the handover from the coalition to a transitional government at the end of June. So, he says, at least temporarily, the Kurds will likely maintain their current autonomous status.

Mr. Pachachi told VOA that the federalism issue will have to be settled by the drafters of Iraq's new constitution, who are not expected to finish their work until after the handover in June.

Still, despite the difficulty of settling that issue, Mr. Pachachi believes the overall timeline for transition is realistic.

"I think so," he said. "Our first step is to have a sovereign provisional government. And after a year and a half or two years, we can have a constitutionally elected government. I think it's not too ambitious. I think it's very realizable."

Mr. Pachachi says Iraq can develop a healthy, thriving democracy, in part because the Iraqi people are relatively well-educated. He believes Iraqis can overcome their ethnic and religious differences to form a new society.

"What society doesn't have divisions? I mean, we are not unique in that," he said. "We can overcome these divisions and create a viable democracy in this country."

Despite Mr. Pachachi's optimism, the Kurdish issue is high on the agenda for both the Governing Council and coalition chief Paul Bremer, who has had several recent meetings with Iraq's two main Kurdish leaders in recent weeks.

Coalition officials downplay the significance of those meetings, saying they are just talking about the overall transitional plan. But local media reports indicate the federalism issue is the main topic of discussion.